When tax time comes in Canada and Quebec, you usually have until April 30 to submit your return. Before this period, it will be important to make sure that you comply with all the rules to avoid the financial consequences associated with mistakes.
To comply with all the provisions governing your federal and provincial tax return, you must refer to the Tax and Income Law. This law aims to indicate all the amounts to declare as well as the possibilities of tax deduction.
The tax declaration process can be complex for many and in many cases, it is easier to deal with a professional to avoid mistakes that can have financial repercussions.
See the 3 articles of the Tax and Income Act that you absolutely must remember!
1) Article 2 of the Tax Act - Who has to pay tax in Canada
In order to know if you are subject to Canadian taxation , it is important that you become familiar with article 2 of the Tax and Income Act. Your tax obligations in terms of tax returns will vary depending on whether you live in Canada or if you have left the territory permanently or just for a temporary period.
If you live permanently in Canada
For anyone who lives permanently in Canada, it will be necessary to file a tax return in Canada. This category obviously includes Canadian citizens and residents, but that's not all. Even if you are a new arrival in Canada, you will have to file a return.
Also, when a person dies during the year, it is possible that a legal representative will file a final tax return. In this case, it will also be necessary to request a discharge certificate. The representative of the deceased will also be tasked with managing the person's benefits and credits.
Finally, for a member of an indigenous community, it is important to know that there are many tax exemptions that need to be known when having to declare your income.
If you have left Canada permanently or temporarily
If you have made the decision to leave Canada, your situation will depend on whether you have left temporarily or forever. Firstly, if you are a de facto resident, you will have the same tax obligations as a person living in Canada permanently.
A de facto resident is a person who lives in Canada, but who, for temporary, medical or school reasons, must temporarily move outside the country. This will also be the case for people who go to the United States for the winter , commonly referred to as snowbirds.
However, if you are an American citizen or if you have received permanent residence from the United States Citizenship and Immigration Services (the green card), your status will be different and you will therefore need to consult a tax law professional to get an informed answer according to your situation.
Next, if you are a federal or provincial government employee and have a work mandate abroad, you will be considered a permanent resident of Canada for tax purposes.
Finally, if you have permanently left Canada, your tax obligations will depend on the time of your departure. Eventually, if nothing ties you to Canada anymore, you will no longer have any tax obligations towards Canada.
If you are temporarily living in Canada
Finally, if the person is considered a temporary resident of Canada , you will also need to check if certain obligations apply to you. Firstly, if you are not a resident of Canada and you are in the territory for less than 183 days, you will have no tax obligations in the country.
Secondly, if you are studying in Canada, you will need to check your residency status to know your tax obligations in the country. Generally, you will not be considered a resident for tax purposes if you periodically return to your country of origin for a significant period.
Finally, if you are a seasonal agricultural worker, you will also need to verify the residential link you have with Canada. Here are some examples of residential links:
- You have a home in Canada,
- Your spouse or partner lives in Canada, or
- You have social ties in Canada.
In the case of the agricultural worker not being considered a resident for income tax purposes, you will only be subject to tax obligations on income from Canadian sources.
2) Section 122.6 - The Canada Child Benefit
Sections 122.6 and following of the Income Tax Act explain one of the most important benefits of federal law : the Canada Child Benefit. This is a monthly payment that will not be subject to tax.
This benefit can be issued to all eligible families to help them support all minor children in the family. Also, the Canada Child Benefit will allow you to register your children for additional credits, including:
- The Goods and Services Tax (GST) credit,
- The payment to the incentive to act for the climate, and
- Any other program administered by the Canada Revenue Agency.
Did you know? It is possible to receive an additional amount in the event that one of the children under 18 years of age has a disability .
To be eligible for the Canadian Child Benefit, it is important to meet all of the following conditions. First, the child must live with you and be under 18 years of age. Also, you must be the main person responsible for all matters relating to the care and education of the child.
| Important! You still have the possibility to apply for the allowance if the child in question resides with you only part-time or if your net family income is too high. In this case, the CRA will consider your income from the previous year. |
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Next, from a tax perspective, it is necessary that you are considered a resident of Canada. This will be the case if you are able to establish a strong enough residential link in the country.
Finally, it is necessary that one of the parents be able to demonstrate that they are considered as part of one of the following categories:
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Canadian citizen,
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Permanent resident,
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Protected person,
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Temporary resident with a valid permit in the 19th month of their residence in Canada, and
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A member of an indigenous community
If you wish to benefit from the Canadian Child Benefit , it is strongly recommended to apply for it as soon as possible. So, from birth or when the child starts living with you.
You want to get the Canadian Child Benefit? For any question, fill out the JuriGo form to find a tax law specialist lawyer for free!
3) Article 245 of the Income Tax Act - EVERYTHING you need to know about tax avoidance
Finally, the last article that must absolutely be remembered concerns the concept of tax avoidance . For many, it is a scenario that only the very rich use to avoid paying taxes. However, tax avoidance concerns everyone and it is better to know what this implies in order to avoid the severe criminal charges associated with the act.
The article begins by giving the definition of two important concepts for the concept of tax avoidance in Canada, namely the tax attribute and the tax benefit.
The tax attribute
When it comes to the tax attribute, the law first refers to the taxable income earned by the person in Canada. Also, the law will include all amounts that are refundable to them under the Income Tax Act and income.
In short, it is all the income that is attributable to the person in question and whose source is within Canada.
The tax advantage
Next, as for the tax advantage, the legislator includes all notions of reduction, avoidance or deferral of tax. Also, the principle of increasing a tax refund or any other amount owed to you under the Law should be considered as a tax advantage.
More specifically, it will be a question of tax evasion for any operation that would result in a tax advantage, whether direct or not. However, this will not be the case if it is possible to consider that the operation in question was carried out for a genuine objective.
Good to know! In Canada, obtaining a tax advantage will not be considered as a genuine purpose and therefore, you will be found guilty of tax evasion.
The operation in question can be carried out in isolation or be part of a series of operations aimed at providing a tax advantage for the person who is accused of evasion.
What happens if you are found guilty of evasion? Normally, certain consequences will be imposed on you in order to eliminate any tax advantage that would result from the faulty operation. Therefore, in this case, the judge will have to impose penalties that are considered reasonable under the circumstances.
To do this, the decision maker will need to determine your tax attributes in order to effectively eliminate all the tax benefits that result from the faulty operation. Therefore, it is possible that deductions, exemptions or exclusions of a part of the income may be totally admitted or refused.
For any tax-related question, consult a lawyer partnered with JuriGo!
When you have a question related to federal or provincial taxes, it is important to ensure compliance with the legislation to avoid the heavy financial consequences associated with tax offenses.
Also, in some cases, you may face even more severe sanctions, even a prison term. To make sure you comply with all the rules, it may be interesting to hire a lawyer specialized in tax law.
The latter can not only warn you in case of potential offense, but can also guide you to optimize your tax situation and reduce your taxes in Canada and Quebec.
All you have left to do is to communicate with JuriGo to find the lawyer you need for free and without any commitment on your part!